Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany



20


Lena Jacobi and Jochen Kluve

programme participation. Bergemann (2005) finds that for women partici-
pation significantly increases the reemployment probability. Furthermore, she
reports significantly positive effects on men’s and women’s probability to
remain employed. Caliendo et al. (2003) use the recently derived adminis-
trative data for the years 2000-2002, which provides information on
programme effects in West Germany for the first time. Their results are pessi-
mistic, revealing negative mean employment effects. Positive employment
effects are limited to few socio-demographic groups, namely women over 50,
long-term unemployed and hard-to-place women in West Germany as well as
female long-term unemployed in East Germany. However, since the obser-
vation period is rather short, the negative effects might represent locking-in
effects similar to the ones found for training programmes.

The evaluation study by SOSTRA/Compass/IMU/PIW (2005) provides new
evidence for the period 2000 - 2004. At the time being, results on job creation
schemes after Hartz are still preliminary. The authors use administrative data
of persons who entered job creation measures in April of the years 2000 to
2004. Control groups are constructed using matching methods. The
programme effect on the probability to leave unemployment is assessed by
comparing the survival functions of treated and non-treated groups, where un-
employment spells include the time spent in unemployment before partici-
pation started. The study confirms the generally negative effects of partici-
pation in job creation measures for time periods before Hartz, though effects
seem to be positive in the long-run in West Germany. The results suggest that
the detrimental effects of job creation measures regarding unemployment du-
ration are entirely caused by the locking-in of participants, while stigma effects
do not seem to play a role. Regarding effects of the Hartz reforms, the study
finds negative treatment effects for the post-reform period, too, although the
magnitude of the effects seems to have decreased. Since 2004 it has been a
lawful objective of job creation schemes to generate or preserve “employ-
ability” of participants, rather than actual employment only. As yet the ev-
idence on impacts of job creation measures on employability is inconclusive.

4. (b) Activating the Unemployed

The Hartz reform shifts priority towards active measures that require
proactive behaviour of the unemployed and promote their direct integration
into regular employment (cf. Section 3). To this end, the reform re-designed in-
tegration subsidies, introduced new forms of wage subsidies, start-up subsidies
and jobs with reduced social security contributions. In the following section we
review evaluation studies of such measures before the reform, if applicable,
and subsequently focus on the novel evidence post-reform.



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